Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 37347 

1See Docket No. RM2018–3, Order Adopting 

Final Rules Relating to Non-Public Information, 

June 27, 2018, Attachment A at 19–22 (Order No. 

4679). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 ‘‘MEO Interface’’ or ‘‘MEO’’ means a binary 

order interface for certain order types as set forth 

in Rule 516 into the MIAX Pearl System. See the 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

III. Request for Comment and Public 

Meeting 

The NRC will hold a public meeting 

to discuss the PSDAR and receive 

comments on Thursday, July 29, 2021, 

from 6:00 p.m. until 9:00 p.m. (ET), at 

the Sleepy Hollow Hotel and 

Conference Center (previously the 

DoubleTree Hotel), located at 455 South 

Broadway, in Tarrytown, NY. The NRC 

requests that comments that are not 

provided during the meeting be 

submitted in writing, as noted in section 

I, ‘‘Obtaining Information and 

Submitting Comments,’’ of this 

document, by October 22, 2021. 

Dated: July 12, 2021. 

For the Nuclear Regulatory Commission. 

James G. Danna, 

Chief, Plant Licensing Branch I, Division of 

Operating Reactor Licensing, Office of 

Nuclear Reactor Regulation. 

[FR Doc. 2021–15068 Filed 7–14–21; 8:45 am] 

BILLING CODE 7590–01–P 

POSTAL REGULATORY COMMISSION 

[Docket Nos. MC2021–110 and CP2021–112] 

New Postal Product 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Commission is noticing a 

recent Postal Service filing for the 

Commission’s consideration concerning 

a negotiated service agreement. This 

notice informs the public of the filing, 

invites public comment, and takes other 

administrative steps. 

DATES: Comments are due: July 19, 

2021. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Docketed Proceeding(s) 

I. Introduction 

The Commission gives notice that the 

Postal Service filed request(s) for the 

Commission to consider matters related 

to negotiated service agreement(s). The 

request(s) may propose the addition or 

removal of a negotiated service 

agreement from the market dominant or 

the competitive product list, or the 

modification of an existing product 

currently appearing on the market 

dominant or the competitive product 

list. 

Section II identifies the docket 

number(s) associated with each Postal 

Service request, the title of each Postal 

Service request, the request’s acceptance 

date, and the authority cited by the 

Postal Service for each request. For each 

request, the Commission appoints an 

officer of the Commission to represent 

the interests of the general public in the 

proceeding, pursuant to 39 U.S.C. 505 

(Public Representative). Section II also 

establishes comment deadline(s) 

pertaining to each request. 

The public portions of the Postal 

Service’s request(s) can be accessed via 

the Commission’s website (http://

www.prc.gov). Non-public portions of 

the Postal Service’s request(s), if any, 

can be accessed through compliance 

with the requirements of 39 CFR 

3011.301.1

The Commission invites comments on 

whether the Postal Service’s request(s) 

in the captioned docket(s) are consistent 

with the policies of title 39. For 

request(s) that the Postal Service states 

concern market dominant product(s), 

applicable statutory and regulatory 

requirements include 39 U.S.C. 3622, 39 

U.S.C. 3642, 39 CFR part 3030, and 39 

CFR part 3040, subpart B. For request(s) 

that the Postal Service states concern 

competitive product(s), applicable 

statutory and regulatory requirements 

include 39 U.S.C. 3632, 39 U.S.C. 3633, 

39 U.S.C. 3642, 39 CFR part 3035, and 

39 CFR part 3040, subpart B. Comment 

deadline(s) for each request appear in 

section II. 

II. Docketed Proceeding(s) 

1. Docket No(s).: MC2021–110 and 

CP2021–112; Filing Title: USPS Request 

to Add Priority Mail & First-Class 

Package Service Contract 198 to 

Competitive Product List and Notice of 

Filing Materials Under Seal; Filing 

Acceptance Date: July 9, 2021; Filing 

Authority: 39 U.S.C. 3642, 39 CFR 

3040.130 through 3040.135, and 39 CFR 

3035.105; Public Representative: 

Kenneth R. Moeller; Comments Due: 

July 19, 2021. 

This Notice will be published in the 

Federal Register. 

Erica A. Barker, 

Secretary. 

[FR Doc. 2021–15074 Filed 7–14–21; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92365; File No. SR– 

PEARL–2021–33] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX Pearl 

Options Fee Schedule 

July 9, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on July 1, 

2021, MIAX PEARL, LLC (‘‘MIAX Pearl’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I, II, and III below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Pearl Options Fee 

Schedule (the ‘‘Fee Schedule’’) to 

amend the fees for the Exchange’s MIAX 

Express Network Full Service (‘‘MEO’’) 3

Ports. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 


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37348 Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 

4 ‘‘Member’’ means an individual or organization 

that is registered with the Exchange pursuant to 

Chapter II of Exchange Rules for purposes of trading 

on the Exchange as an ‘‘Electronic Exchange 

Member’’ or ‘‘Market Maker.’’ Members are deemed 

‘‘members’’ under the Exchange Act. See the 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

5 ‘‘Full Service MEO Port—Bulk’’ means an MEO 

port that supports all MEO input message types and 

binary bulk order entry. See the Definitions Section 

of the Fee Schedule. 

6 ‘‘Full Service MEO Port—Single’’ means an 

MEO port that supports all MEO input message 

types and binary order entry on a single order-byorder basis, but not bulk orders. See the Definitions 

Section of the Fee Schedule. 

7 ‘‘Limited Service MEO Port’’ means an MEO 

port that supports all MEO input message types, but 

does not support bulk order entry and only 

supports limited order types, as specified by the 

Exchange via Regulatory Circular. See the 

Definitions Section of the Fee Schedule. 

8 ‘‘Matching Engine’’ is a part of the MIAX Pearl 

electronic system that processes options orders and 

trades on a symbol-by-symbol basis. Some Matching 

Engines will process option classes with multiple 

root symbols, and other Matching Engines may be 

dedicated to one single option root symbol. A 

particular root symbol may only be assigned to a 

single designated Matching Engine. A particular 

root symbol may not be assigned to multiple 

Matching Engines. See the Definitions Section of 

the Fee Schedule. 

9See Cboe Exchange, Inc. Fee Schedule, Logical 

Connectivity Fees ($750 per port per month for the 

first 5 BOE/FIX Logical Ports and $800 per port per 

month for each port over 5; $1,500 per port per 

month for the first 5 BOE Bulk Logical Ports, $2,500 

per port per month for ports 6–30, and $3,000 per 

port per month for each port over 30); Cboe BXZ 

Exchange, Inc. (‘‘BZX’’) Options Fee Schedule, 

Options Logical Port Fees, Logical Ports ($750 per 

port per month), Ports with Bulk Quoting 

Capabilities ($1,500 per port per month for the first 

and second ports, $2,500 per port per month for 

three or more); Cboe EDGX Exchange, Inc. 

(‘‘EDGX’’) Options Fee Schedule, Options Logical 

Port Fees, Logical Ports ($500 per port per month), 

Ports with Bulk Quoting Capabilities ($600 per port 

per month). See also Nasdaq Stock Market LLC, 

Options 7, Pricing Schedule, Section 3 ($1,500 per 

port per month for the first 5 SQF ports; $1,000 per 

port per month for SQF ports 15–20; and $500 per 

port per month for all SQF ports over 21). 

10See Securities Exchange Act Release No. 82867 

(March 13, 2018), 83 FR 12044 (March 19, 2018) 

(SR–PEARL–2018–07). 

11 ‘‘Affiliate’’ means (i) an affiliate of a Member 

of at least 75% common ownership between the 

firms as reflected on each firm’s Form BD, Schedule 

A, or (ii) the Appointed Market Maker of an 

Appointed EEM (or, conversely, the Appointed 

EEM of an Appointed Market Maker). An 

‘‘Appointed Market Maker’’ is a MIAX Pearl Market 

Maker (who does not otherwise have a corporate 

affiliation based upon common ownership with an 

EEM) that has been appointed by an EEM and an 

‘‘Appointed EEM’’ is an EEM (who does not 

otherwise have a corporate affiliation based upon 

common ownership with a MIAX Pearl Market 

Maker) that has been appointed by a MIAX Pearl 

Market Maker, pursuant to the following process. A 

MIAX Pearl Market Maker appoints an EEM and an 

EEM appoints a MIAX Pearl Market Maker, for the 

purposes of the Fee Schedule, by each completing 

and sending an executed Volume Aggregation 

Request Form by email to membership@

miaxoptions.com no later than 2 business days 

prior to the first business day of the month in which 

the designation is to become effective. Transmittal 

of a validly completed and executed form to the 

Exchange along with the Exchange’s 

acknowledgement of the effective designation to 

each of the Market Maker and EEM will be viewed 

as acceptance of the appointment. The Exchange 

will only recognize one designation per Member. A 

Member may make a designation not more than 

once every 12 months (from the date of its most 

recent designation), which designation shall remain 

in effect unless or until the Exchange receives 

written notice submitted 2 business days prior to 

the first business day of the month from either 

Member indicating that the appointment has been 

terminated. Designations will become operative on 

the first business day of the effective month and 

may not be terminated prior to the end of the 

month. Execution data and reports will be provided 

to both parties. See the Definitions Section of the 

Fee Schedule. 

12 ‘‘Excluded Contracts’’ means any contracts 

routed to an away market for execution. See the 

Definitions Section of the Fee Schedule. 

13 ‘‘TCV’’ means total consolidated volume 

calculated as the total national volume in those 

classes listed on MIAX Pearl for the month for 

which the fees apply, excluding consolidated 

volume executed during the period of time in 

which the Exchange experiences an Exchange 

System Disruption (solely in the option classes of 

the affected Matching Engine). See the Definitions 

Section of the Fee Schedule. 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Fee Schedule to increase the fees for its 

Full Service MEO Ports (the ‘‘Proposed 

Access Fees’’), which allow Members 4

to submit electronic orders in all 

products to the Exchange. The Exchange 

currently offers different options of 

MEO Ports depending on the services 

required by the Member, including a 

Full Service MEO Port-Bulk,5 a Full 

Service MEO Port-Single,6 and a 

Limited Service MEO Port.7 A Member 

may be allocated two (2) Full-Service 

MEO Ports of either type per matching 

engine 8 and may request Limited 

Service MEO Ports for which MIAX 

Pearl will assess Members Limited 

Service MEO Port fees per Matching 

Engine based on the table above. The 

two (2) Full-Service MEO Ports that may 

be allocated per matching engine to a 

Member may consist of: (a) Two (2) Full 

Service MEO Ports—Bulk; (b) two (2) 

Full Service MEO Ports—Single; or (c) 

one (1) Full Service MEO Port—Bulk 

and one (1) Full Service MEO Port— 

Single. 

Unlike other options exchanges that 

provide similar port functionality and 

charge fees on a per port basis,9 the 

Exchange offers Full Service MEO Ports 

as a package and provides Members 

with the option to receive up to two Full 

Service MEO Ports (described above) 

per matching engine to which it 

connects. The Exchange currently has 

twelve (12) matching engines, which 

means Members may receive up to 

twenty-four (24) Full Service MEO Ports 

for a single monthly fee, that can vary 

based on certain volume percentages, as 

described below. For illustrative 

purposes and as described in more 

detail below, the Exchange currently 

assesses Members a fee of $5,000 per 

month in the highest Full Service MEO 

Port—Bulk Tier, regardless of the 

number of Full Service MEO Ports 

allocated to the Member. For example, 

assuming a Member connects to all 

twelve (12) matching engines during a 

month, with two Full Service MEO 

Ports per matching engine, this results 

in a cost of $208.33 per Full Service 

MEO Port ($5,000 divided by 24) for the 

month. This fee has been unchanged 

since the Exchange adopted Purge Port 

fees in 2018.10 The Exchange now 

proposes to increase the Full Service 

MEO Port fees as described below, with 

the highest Tier fee for a Full Service 

MEO Port—Bulkof $10,000 per month. 

Members will continue to receive two 

(2) Full Service MEO Ports to each 

matching engine to which they are 

connected for the single flat monthly 

fee. Assuming a Member connects to all 

twelve (12) matching engines during the 

month, with two Full Service MEO 

Ports per matching engine, this would 

result in a cost of $416.67 per Full 

Service MEO Port ($10,000 divided by 

24). 

The Exchange assesses Members Full 

Service MEO Port Fees, either for a Full 

Service MEO Port—Bulk and/or for a 

Full Service MEO Port—Single, based 

upon the monthly total volume 

executed by a Member and its 

Affiliates 11 on the Exchange across all 

origin types, not including Excluded 

Contracts 12, as compared to the Total 

Consolidated Volume (‘‘TCV’’),13 in all 

MIAX Pearl-listed options. The 

Exchange adopted a tier-based fee 

structure based upon the volume-based 

tiers detailed in the definition of ‘‘NonTransaction Fees Volume-Based Tiers’’ 

described in the Definitions section of 

the Fee Schedule. The Exchange 

assesses these and other monthly Port 

fees on Members in each month the 

market participant is credentialed to use 

a Port in the production environment. 

Current Full Service MEO Port—Bulk 

Fees. Currently, the Exchange assesses 

Members monthly Full Service MEO 

Port—Bulk fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $3,000; 


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Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 37349 

14 ‘‘Market Maker’’ means a Member registered 

with the Exchange for the purpose of making 

markets in options contracts traded on the 

Exchange and that is vested with the rights and 

responsibilities specified in Chapter VI of Exchange 

Rules. See the Definitions Section of the Fee 

Schedule and Exchange Rule 100. 15See supra note 10. 16See MIAX Fee Schedule, Section 5)d)ii); MIAX 

Emerald Fee Schedule, Section 5)d)ii). 17See supra note 9. 18See id. 

19 15 U.S.C. 78f(b). 

20 15 U.S.C. 78f(b)(4) and (5). 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$4,500; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $5,000. 

Proposed Full Service MEO Port— 

Bulk Fees. The Exchange now proposes 

to assess Members monthly Full Service 

MEO Port—Bulk fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $5,000; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$7,500; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $10,000. 

Current Full Service MEO Port— 

Single Fees. Currently, the Exchange 

assesses Members monthly Full Service 

MEO Port—Single fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $2,000; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$3,375; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $3,750. 

Proposed Full Service MEO Port— 

Single Fees. The Exchange now 

proposes to assess Members monthly 

Full Service MEO Port—Single fees as 

follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $2,500; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$3,500; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $4,500. 

The Exchange offers various types of 

ports with differing prices because each 

port accomplishes different tasks, are 

suited to different types of Members, 

and consume varying capacity amounts 

of the network. For instance, MEO ports 

allow for a higher throughput and can 

handle much higher quote/order rates 

than FIX ports. Members that are Market 

Makers 14 or high frequency trading 

firms utilize these ports (typically 

coupled with 10Gb ULL connectivity) 

because they transact in significantly 

higher amounts of messages being sent 

to and from the Exchange, versus FIX 

port users, who are traditionally 

customers sending only orders to the 

Exchange (typically coupled with 1Gb 

connectivity). The different types of 

ports cater to the different types of 

Exchange Memberships and different 

capabilities of the various Exchange 

Members. Certain Members need ports 

and connections that can handle using 

far more of the network’s capacity for 

message throughput, risk protections, 

and the amount of information that has 

to be assessed. Those Members may 

account for the vast majority of network 

capacity utilization and volume 

executed on the Exchange, as discussed 

throughout. 

The Exchange now proposes to 

increase its monthly Full Service MEO 

Port fees since it has not done so since 

the fees were first adopted in 2018 15

and are designed to recover a portion of 

the costs associated with directly 

accessing the Exchange. The Exchange 

notes that its affiliates, Miami 

International Securities Exchange, LLC 

(‘‘MIAX’’) and MIAX Emerald, LLC 

(‘‘MIAX Emerald’’), charge fees for their 

high throughput, low latency MEI Ports 

in a similar fashion as the Exchange 

charges for its MEO Ports—generally, 

the more active user the Member (i.e., 

the greater number/greater national 

ADV of classes assigned to quote on 

MIAX and MIAX Emerald), the higher 

the MEI Port fee.16 This concept is not 

new or novel. The Exchange also notes 

that the proposed increased Full Service 

MEO Port fees are in line with, or 

cheaper than, the similar port fees or 

similar membership fees charged by 

other options exchanges.17

The Exchange has historically 

undercharged for Full Service MEO 

Ports as compared to other options 

exchanges 18 because the Exchange 

provides Full Service MEO Ports as a 

package for a single monthly fee. As 

described above, this package includes 

two Full Service MEO Ports for each of 

the Exchange’s twelve (12) matching 

engines. The Exchange understands 

other options exchanges charge fees on 

a per port basis. The proposed monthly 

fee increases for Full Service MEO Ports 

would bring the Exchange’s fees more in 

line with that of other options 

exchanges, while maintaining a 

competitive fee structure for Full 

Service MEO Ports. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 19

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 20 in 

particular, in that it is an equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

issuers and other persons using its 

facilities. The Exchange also believes 

the proposal furthers the objectives of 

Section 6(b)(5) of the Act in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general to protect investors and the 

public interest and is not designed to 

permit unfair discrimination between 

customers, issuers, brokers and dealers. 

The Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

requirements of the Act that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

market participants. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. The Exchange deems the 

Full Service MEO Port fees to be access 

fees. It records these fees as part of its 

‘‘Access Fees’’ revenue in its financial 

statements. The Exchange believes that 

it is important to demonstrate that these 

fees are based on its costs and 

reasonable business needs. The 

Exchange believes the Proposed Access 

Fees will allow the Exchange to offset 

expense the Exchange has and will 

incur, and that the Exchange is 

providing sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

Accordingly, the Exchange is providing 

an analysis of its revenues, costs, and 

profitability associated with the 

Proposed Access Fees. This analysis 

includes information regarding its 


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37350 Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 

21See Securities Exchange Act Release No. 91460 

(April 2, 2021), 86 FR 18349 (April 8, 2021) (SR– 

EMERALD–2021–11) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend Its Fee Schedule To Adopt Port Fees, 

Increase Certain Network Connectivity Fees, and 

Increase the Number of Additional Limited Service 

MIAX Emerald Express Interface Ports Available to 

Market Makers) (adopting tiered MEI Port fee 

structure ranging from $5,000 to $20,500 per 

month). 

22See Securities Exchange Act Release No. 85459 

(March 29, 2019), 84 FR 13363 (April 4, 2019) (SR– 

BOX–2018–24, SR–BOX–2018–37, and SR–BOX– 

2019–04). 

23See Staff Guidance on SRO Rule Filings 

Relating to Fees (May 21, 2019), at https://

www.sec.gov/tm/staff-guidance-sro-rule-filings-fees 

(the ‘‘Guidance’’). 

24See ‘‘The market at a glance’’, available at 

www.miaxoptions.com (last visited June 30, 2021). 

25See supra note 21. 

methodology for determining the costs 

and revenues associated with the 

Proposed Access Fees. 

In order to determine the Exchange’s 

costs to provide the access services 

associated with the Proposed Access 

Fees, the Exchange conducted an 

extensive cost review in which the 

Exchange analyzed every expense item 

in the Exchange’s general expense 

ledger to determine whether each such 

expense relates to the Proposed Access 

Fees, and, if such expense did so relate, 

what portion (or percentage) of such 

expense actually supports the access 

services. The sum of all such portions 

of expenses represents the total cost of 

the Exchange to provide the access 

services associated with the Proposed 

Access Fees. For the avoidance of doubt, 

no expense amount was allocated twice. 

The Exchange is also providing detailed 

information regarding the Exchange’s 

cost allocation methodology—namely, 

information that explains the 

Exchange’s rationale for determining 

that it was reasonable to allocate certain 

expenses described in this filing 

towards the cost to the Exchange to 

provide the access services associated 

with the Proposed Access Fees. 

In order to determine the Exchange’s 

projected revenues associated with the 

Proposed Access Fees, the Exchange 

analyzed the number of Members 

currently utilizing the Full Service MEO 

Ports, and, utilizing a recent monthly 

billing cycle representative of 2021 

monthly revenue, extrapolated 

annualized revenue on a going-forward 

basis. The Exchange does not believe it 

is appropriate to factor into its analysis 

future revenue growth or decline into its 

projections for purposes of these 

calculations, given the uncertainty of 

such projections due to the continually 

changing access needs of market 

participants, discounts that can be 

achieved due to lower trading volume 

and vice versa, market participant 

consolidation, etc. Additionally, the 

Exchange similarly does not factor into 

its analysis future cost growth or 

decline. The Exchange is presenting its 

revenue and expense associated with 

the Proposed Access Fees in this filing 

in a manner that is consistent with how 

the Exchange presents its revenue and 

expense in its Audited Unconsolidated 

Financial Statements. The Exchange’s 

most recent Audited Unconsolidated 

Financial Statement is for 2020. 

However, since the revenue and 

expense associated with the Proposed 

Access Fees were not in place in 2020 

or for the first two quarters of 2021, the 

Exchange believes its 2020 Audited 

Unconsolidated Financial Statement is 

not useful for analyzing the 

reasonableness of the total annual 

revenue and costs associated with the 

Proposed Access Fees. Accordingly, the 

Exchange believes it is more appropriate 

to analyze the Proposed Access Fees 

utilizing its 2021 revenue and costs, as 

described herein, which utilize the same 

presentation methodology as set forth in 

the Exchange’s previously-issued 

Audited Unconsolidated Financial 

Statements. Based on this analysis, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they will not result in excessive 

pricing or supra-competitive profit 

when comparing the Exchange’s total 

annual expense associated with 

providing the services associated with 

the Proposed Access Fees versus the 

total projected annual revenue the 

Exchange will collect for providing 

those services. 

The Exchange notes that this is the 

same process utilized by the Exchange’s 

affiliate, MIAX Emerald, in a filing 

recently noticed by the Commission 

when MIAX Emerald adopted its own 

MEI Port fees.21

* * * * * 

On March 29, 2019, the Commission 

issued its Order Disapproving Proposed 

Rule Changes to Amend the Fee 

Schedule on the BOX Market LLC 

Options Facility to Establish BOX 

Connectivity Fees for Participants and 

Non-Participants Who Connect to the 

BOX Network (the ‘‘BOX Order’’).22 On 

May 21, 2019, the Commission issued 

the Staff Guidance on SRO Rule Filings 

Relating to Fees.23 Accordingly, the 

Exchange believes that the Proposed 

Access Fees are consistent with the Act 

because they (i) are reasonable, 

equitably allocated, not unfairly 

discriminatory, and not an undue 

burden on competition; (ii) comply with 

the BOX Order and the Guidance; (iii) 

are supported by evidence (including 

comprehensive revenue and cost data 

and analysis) that they are fair and 

reasonable because they will not result 

in excessive pricing or supracompetitive profit; and (iv) utilize a 

cost-based justification framework that 

is substantially similar to a framework 

previously used by the Exchange, and 

its affiliates MIAX and MIAX Emerald, 

to establish or increase other nontransaction fees. Accordingly, the 

Exchange believes that the Commission 

should find that the Proposed Access 

Fees are consistent with the Act. 

* * * * * 

As of June 30, 2021, the Exchange had 

only a 5.31% market share of the U.S. 

equity options industry for the month of 

June 2021.24 The Exchange is not aware 

of any evidence that a market share of 

approximately 5–6% provides the 

Exchange with anti-competitive pricing 

power. If the Exchange were to attempt 

to establish unreasonable pricing, then 

no market participant would join or 

connect, and existing market 

participants would disconnect. 

Separately, the Exchange is not aware 

of any reason why market participants 

could not simply drop their access to an 

exchange (or not initially access an 

exchange) if an exchange were to 

establish prices for its non-transaction 

fees that, in the determination of such 

market participant, did not make 

business or economic sense for such 

market participant to access such 

exchange. No options market participant 

is required by rule, regulation, or 

competitive forces to be a Member of the 

Exchange. As evidence of the fact that 

market participants can and do drop 

their access to exchanges based on nontransaction fee pricing, R2G Services 

LLC (‘‘R2G’’) filed a comment letter after 

BOX’s proposed rule changes to 

increase its connectivity fees (SR–BOX– 

2018–24, SR–BOX–2018–37, and SR– 

BOX–2019–04). The R2G Letter stated, 

‘‘[w]hen BOX instituted a $10,000/ 

month price increase for connectivity; 

we had no choice but to terminate 

connectivity into them as well as 

terminate our market data relationship. 

The cost benefit analysis just didn’t 

make any sense for us at those new 

levels.’’ Similarly, the Exchange’s 

affiliate, MIAX Emerald, noted in a 

recent filing that once MIAX Emerald 

issued a notice that it was instituting 

MEI Port fees, among other nontransaction fees, one Member dropped 

its access to the Exchange as a result of 

those fees.25 Accordingly, these 

examples show that if an exchange sets 

too high of a fee for connectivity and/ 

or other non-transaction fees for its 

relevant marketplace, market 


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26The Exchange has not yet finalized its 2021 

year end results. 

27The percentage allocations used in this 

proposed rule change may differ from past filings 

from the Exchange or its affiliates due to, among 

other things, changes in expenses charged by thirdparties, adjustments to internal resource allocations, 

and different system architecture of the Exchange 

as compared to its affiliates. 

28For example, the Exchange previously noted 

that all third-party expense described in its prior fee 

filing was contained in the information technology 

and communication costs line item under the 

section titled ‘‘Operating Expenses Incurred 

Directly or Allocated From Parent,’’ in the 

Exchange’s 2019 Form 1 Amendment containing its 

financial statements for 2018. See Securities 

Exchange Act Release No. 87876 (December 31, 

2019), 85 FR 757 (January 7, 2020) (SR–PEARL– 

2019–36). Accordingly, the third-party expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2021 Form 1 Amendment, 

which will be filed in 2022. 

29 In fact, on October 22, 2019, the Exchange was 

notified by SFTI that it is again raising its fees 

charged to the Exchange by approximately 11%, 

without having to show that such fee change 

complies with the Act by being reasonable, 

equitably allocated, and not unfairly 

discriminatory. It is unfathomable to the Exchange 

that, given the critical nature of the infrastructure 

services provided by SFTI, that its fees are not 

required to be rule-filed with the Commission 

pursuant to Section 19(b)(1) of the Act and Rule 

19b–4 thereunder. See 15 U.S.C. 78s(b)(1) and 17 

CFR 240.19b–4, respectively. 

participants can choose to drop their 

access to such exchange. 

The Exchange’s high performance 

network solutions and supporting 

infrastructure (including employee 

support), provides unparalleled system 

throughput and the capacity to handle 

approximately 10.7 million order 

messages per second. On an average 

day, the Exchange handles over 

approximately 2.7 billion total 

messages. However, in order to achieve 

a consistent, premium network 

performance, the Exchange must build 

out and maintain a network that has the 

capacity to handle the message rate 

requirements of its most heavy network 

consumers. These billions of messages 

per day consume the Exchange’s 

resources and significantly contribute to 

the overall expense for storage and 

network transport capabilities. 

In order to provide more detail and to 

quantify the Exchange’s costs associated 

with providing access to the Exchange 

in general, the Exchange notes that there 

are material costs associated with 

providing the infrastructure and 

headcount to fully-support access to the 

Exchange. The Exchange incurs 

technology expense related to 

establishing and maintaining 

Information Security services, enhanced 

network monitoring and customer 

reporting, as well as Regulation SCI 

mandated processes, associated with its 

network technology. While some of the 

expense is fixed, much of the expense 

is not fixed, and thus increases as the 

services associated with the Proposed 

Access Fees increase. For example, new 

Members to the Exchange may require 

the purchase of additional hardware to 

support those Members as well as 

enhanced monitoring and reporting of 

customer performance that the 

Exchange and its affiliates provide. 

Further, as the total number Members 

increases, the Exchange and its affiliates 

may need to increase their data center 

footprint and consume more power, 

resulting in increased costs charged by 

their third-party data center provider. 

Accordingly, the cost to the Exchange 

and its affiliates to provide access to its 

Members is not fixed. The Exchange 

believes the Proposed Access Fees are 

reasonable in order to offset a portion of 

the costs to the Exchange associated 

with providing access to its network 

infrastructure. 

The Exchange only has four primary 

sources of revenue: Transaction fees, 

access fees (which includes the 

Proposed Access Fees), regulatory fees, 

and market data fees. Accordingly, the 

Exchange must cover all of its expenses 

from these four primary sources of 

revenue. 

The Exchange believes that the 

Proposed Access Fees are fair and 

reasonable because they will not result 

in excessive pricing or supracompetitive profit, when comparing the 

total annual expense that the Exchange 

projects to incur in connection with 

providing these access services versus 

the total annual revenue that the 

Exchange projects to collect in 

connection with services associated 

with the Proposed Access Fees. For 

2021 26, the total annual expense for 

providing the access services associated 

with the Proposed Access Fees for the 

Exchange is projected to be 

approximately $897,084. The $897,084 

in projected total annual expense is 

comprised of the following, all of which 

are directly related to the access services 

associated with the Proposed Access 

Fees: (1) Third-party expense, relating to 

fees paid by the Exchange to thirdparties for certain products and services; 

and (2) internal expense, relating to the 

internal costs of the Exchange to 

provide the services associated with the 

Proposed Access Fees.27 As noted 

above, the Exchange believes it is more 

appropriate to analyze the Proposed 

Access Fees utilizing its 2021 revenue 

and costs, which utilize the same 

presentation methodology as set forth in 

the Exchange’s previously-issued 

Audited Unconsolidated Financial 

Statements.28 The $897,084 in projected 

total annual expense is directly related 

to the access services associated with 

the Proposed Access Fees, and not any 

other product or service offered by the 

Exchange. It does not include general 

costs of operating matching systems and 

other trading technology, and no 

expense amount was allocated twice. 

As discussed, the Exchange 

conducted an extensive cost review in 

which the Exchange analyzed every 

expense item in the Exchange’s general 

expense ledger (this includes over 150 

separate and distinct expense items) to 

determine whether each such expense 

relates to the access services associated 

with the Proposed Access Fees, and, if 

such expense did so relate, what portion 

(or percentage) of such expense actually 

supports those services, and thus bears 

a relationship that is, ‘‘in nature and 

closeness,’’ directly related to those 

services. The sum of all such portions 

of expenses represents the total cost of 

the Exchange to provide access services 

associated with the Proposed Access 

Fees. 

For 2021, total third-party expense, 

relating to fees paid by the Exchange to 

third-parties for certain products and 

services for the Exchange to be able to 

provide the access services associated 

with the Proposed Access Fees, is 

projected to be $40,166. This includes, 

but is not limited to, a portion of the 

fees paid to: (1) Equinix, for data center 

services, for the primary, secondary, and 

disaster recovery locations of the 

Exchange’s trading system 

infrastructure; (2) Zayo Group Holdings, 

Inc. (‘‘Zayo’’) for network services (fiber 

and bandwidth products and services) 

linking the Exchange’s office locations 

in Princeton, New Jersey and Miami, 

Florida, to all data center locations; (3) 

Secure Financial Transaction 

Infrastructure (‘‘SFTI’’) 29, which 

supports connectivity and feeds for the 

entire U.S. options industry; (4) various 

other services providers (including 

Thompson Reuters, NYSE, Nasdaq, and 

Internap), which provide content, 

connectivity services, and infrastructure 

services for critical components of 

options connectivity and network 

services; and (5) various other hardware 

and software providers (including Dell 

and Cisco, which support the 

production environment in which 

Members connect to the network to 

trade, receive market data, etc.). 

For clarity, only a portion of all fees 

paid to such third-parties is included in 

the third-party expense herein, and no 

expense amount is allocated twice. 

Accordingly, the Exchange does not 

allocate its entire information 

technology and communication costs to 

the access services associated with the 

Proposed Access Fees. Further, the 


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Exchange notes that, with respect to the 

MIAX Pearl expenses included herein, 

those expenses only cover the MIAX 

Pearl options market; expenses 

associated with the MIAX Pearl equities 

market are accounted for separately and 

are not included within the scope of this 

filing. 

The Exchange believes it is reasonable 

to allocate such third-party expense 

described above towards the total cost to 

the Exchange to provide the access 

services associated with the Proposed 

Access Fees. In particular, the Exchange 

believes it is reasonable to allocate the 

identified portion of the Equinix 

expense because Equinix operates the 

data centers (primary, secondary, and 

disaster recovery) that host the 

Exchange’s network infrastructure. This 

includes, among other things, the 

necessary storage space, which 

continues to expand and increase in 

cost, power to operate the network 

infrastructure, and cooling apparatuses 

to ensure the Exchange’s network 

infrastructure maintains stability. 

Without these services from Equinix, 

the Exchange would not be able to 

operate and support the network and 

provide the access services associated 

with the Proposed Access Fees to its 

Members and their customers. The 

Exchange did not allocate all of the 

Equinix expense toward the cost of 

providing the access services associated 

with the Proposed Access Fees, only 

that portion which the Exchange 

identified as being specifically mapped 

to providing the access services 

associated with the Proposed Access 

Fees, approximately 1.80% of the total 

applicable Equinix expense. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

The Exchange believes it is reasonable 

to allocate the identified portion of the 

Zayo expense because Zayo provides 

the internet, fiber and bandwidth 

connections with respect to the 

network, linking the Exchange with its 

affiliates, MIAX and MIAX Emerald, as 

well as the data center and disaster 

recovery locations. As such, all of the 

trade data, including the billions of 

messages each day per exchange, flow 

through Zayo’s infrastructure over the 

Exchange’s network. Without these 

services from Zayo, the Exchange would 

not be able to operate and support the 

network and provide the access services 

associated with the Proposed Access 

Fees. The Exchange did not allocate all 

of the Zayo expense toward the cost of 

providing the access services associated 

with the Proposed Access Fees, only the 

portion which the Exchange identified 

as being specifically mapped to 

providing the Proposed Access Fees, 

approximately 0.90% of the total 

applicable Zayo expense. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

actual cost to provide the access 

services associated with the Proposed 

Access Fees, and not any other service, 

as supported by its cost review. 

The Exchange believes it is reasonable 

to allocate the identified portions of the 

SFTI expense and various other service 

providers’ (including Thompson 

Reuters, NYSE, Nasdaq, and Internap) 

expense because those entities provide 

connectivity and feeds for the entire 

U.S. options industry, as well as the 

content, connectivity services, and 

infrastructure services for critical 

components of the network. Without 

these services from SFTI and various 

other service providers, the Exchange 

would not be able to operate and 

support the network and provide access 

to its Members and their customers. The 

Exchange did not allocate all of the SFTI 

and other service providers’ expense 

toward the cost of providing the access 

services associated with the Proposed 

Access Fees, only the portions which 

the Exchange identified as being 

specifically mapped to providing the 

access services associated with the 

Proposed Access Fees, approximately 

0.90% of the total applicable SFTI and 

other service providers’ expense. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees. 

The Exchange believes it is reasonable 

to allocate the identified portion of the 

other hardware and software provider 

expense because this includes costs for 

dedicated hardware licenses for 

switches and servers, as well as 

dedicated software licenses for security 

monitoring and reporting across the 

network. Without this hardware and 

software, the Exchange would not be 

able to operate and support the network 

and provide access to its Members and 

their customers. The Exchange did not 

allocate all of the hardware and software 

provider expense toward the cost of 

providing the access services associated 

with the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

providing the access services associated 

with the Proposed Access Fees, 

approximately 0.90% of the total 

applicable hardware and software 

provider expense. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

actual cost to provide the access 

services associated with the Proposed 

Access Fees. 

For 2021, total projected internal 

expense, relating to the internal costs of 

the Exchange to provide the access 

services associated with the Proposed 

Access Fees, is projected to be $856,918. 

This includes, but is not limited to, 

costs associated with: (1) Employee 

compensation and benefits for full-time 

employees that support the access 

services associated with the Proposed 

Access Fees, including staff in network 

operations, trading operations, 

development, system operations, 

business, as well as staff in general 

corporate departments (such as legal, 

regulatory, and finance) that support 

those employees and functions 

(including an increase as a result of the 

higher determinism project); (2) 

depreciation and amortization of 

hardware and software used to provide 

the access services associated with the 

Proposed Access Fees, including 

equipment, servers, cabling, purchased 

software and internally developed 

software used in the production 

environment to support the network for 

trading; and (3) occupancy costs for 

leased office space for staff that provide 

the access services associated with the 

Proposed Access Fees. The breakdown 

of these costs is more fully-described 

below. For clarity, only a portion of all 

such internal expenses are included in 

the internal expense herein, and no 

expense amount is allocated twice. 

Accordingly, the Exchange does not 

allocate its entire costs contained in 

those items to the access services 

associated with the Proposed Access 

Fees. 

The Exchange believes it is reasonable 

to allocate such internal expense 

described above towards the total cost to 

the Exchange to provide the access 

services associated with the Proposed 

Access Fees. In particular, the 

Exchange’s employee compensation and 

benefits expense relating to providing 

the access services associated with the 

Proposed Access Fees is projected to be 

$783,513, which is only a portion of the 

$9,163,894 total projected expense for 

employee compensation and benefits. 

The Exchange believes it is reasonable 

to allocate the identified portion of such 

expense because this includes the time 

spent by employees of several 

departments, including Technology, 

Back Office, Systems Operations, 

Networking, Business Strategy 

Development (who create the business 

requirement documents that the 

Technology staff use to develop network 


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30The Exchange notes that the total depreciation 

expense is different from the total for the 

Exchange’s recent Trading Permit filing (SR– 

PEARL–2021–32) because the Exchange factors in 

the depreciation of its own internally developed 

software when assessing costs for Full Service MEO 

Ports, resulting in a higher depreciation expense 

number in this filing. 

features and enhancements), Trade 

Operations, Finance (who provide 

billing and accounting services relating 

to the network), and Legal (who provide 

legal services relating to the network, 

such as rule filings and various license 

agreements and other contracts). As part 

of the extensive cost review conducted 

by the Exchange, the Exchange reviewed 

the amount of time spent by each 

employee on matters relating to the 

provision of access services associated 

with the Proposed Access Fees. Without 

these employees, the Exchange would 

not be able to provide the access 

services associated with the Proposed 

Access Fees to its Members and their 

customers. The Exchange did not 

allocate all of the employee 

compensation and benefits expense 

toward the cost of the access services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

access services associated with the 

Proposed Access Fees, approximately 

8.55% of the total applicable employee 

compensation and benefits expense. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

The Exchange’s depreciation and 

amortization expense relating to 

providing the access services associated 

with the Proposed Access Fees is 

projected to be $64,456, which is only 

a portion of the $2,864,716 30 total 

projected expense for depreciation and 

amortization. The Exchange believes it 

is reasonable to allocate the identified 

portion of such expense because such 

expense includes the actual cost of the 

computer equipment, such as dedicated 

servers, computers, laptops, monitors, 

information security appliances and 

storage, and network switching 

infrastructure equipment, including 

switches and taps that were purchased 

to operate and support the network and 

provide the access services associated 

with the Proposed Access Fees. Without 

this equipment, the Exchange would not 

be able to operate the network and 

provide the access services associated 

with the Proposed Access Fees to its 

Members and their customers. The 

Exchange did not allocate all of the 

depreciation and amortization expense 

toward the cost of providing the access 

services associated with the Proposed 

Access Fees, only the portion which the 

Exchange identified as being 

specifically mapped to providing the 

access services associated with the 

Proposed Access Fees, approximately 

2.25% of the total applicable 

depreciation and amortization expense, 

as these access services would not be 

possible without relying on such. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

The Exchange’s occupancy expense 

relating to providing the access services 

associated with the Proposed Access 

Fees is projected to be $8,949, which is 

only a portion of the $497,180 total 

projected expense for occupancy. The 

Exchange believes it is reasonable to 

allocate the identified portion of such 

expense because such expense 

represents the portion of the Exchange’s 

cost to rent and maintain a physical 

location for the Exchange’s staff who 

operate and support the network, 

including providing the access services 

associated with the Proposed Access 

Fees. This amount consists primarily of 

rent for the Exchange’s Princeton, NJ 

office, as well as various related costs, 

such as physical security, property 

management fees, property taxes, and 

utilities. The Exchange operates its 

Network Operations Center (‘‘NOC’’) 

and Security Operations Center (‘‘SOC’’) 

from its Princeton, New Jersey office 

location. A centralized office space is 

required to house the staff that operates 

and supports the network. The 

Exchange currently has approximately 

150 employees. Approximately twothirds of the Exchange’s staff are in the 

Technology department, and the 

majority of those staff have some role in 

the operation and performance of the 

access services associated with the 

Proposed Access Fees. Without this 

office space, the Exchange would not be 

able to operate and support the network 

and provide the access services 

associated with the Proposed Access 

Fees to its Members and their 

customers. Accordingly, the Exchange 

believes it is reasonable to allocate the 

identified portion of its occupancy 

expense because such amount 

represents the Exchange’s actual cost to 

house the equipment and personnel 

who operate and support the Exchange’s 

network infrastructure and the access 

services associated with the Proposed 

Access Fees. The Exchange did not 

allocate all of the occupancy expense 

toward the cost of providing the access 

services associated with the Proposed 

Access Fees, only the portion which the 

Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

1.80% of the total applicable occupancy 

expense. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s cost to 

provide the access services associated 

with the Proposed Access Fees, and not 

any other service, as supported by its 

cost review. 

The Exchange notes that a material 

portion of its total overall expense is 

allocated to the provision of access 

services (including connectivity, ports, 

and trading permits). The Exchange 

believes this is reasonable and in line, 

as the Exchange operates a technologybased business that differentiates itself 

from its competitors based on its trading 

systems that rely on access to a high 

performance network, resulting in 

significant technology expense. Over 

two-thirds of Exchange staff are 

technology-related employees. The 

majority of the Exchange’s expense is 

technology-based. As described above, 

the Exchange has only four primary 

sources of fees in to recover its costs, 

thus the Exchange believes it is 

reasonable to allocate a material portion 

of its total overall expense towards 

access fees. 

Accordingly, based on the facts and 

circumstances presented, the Exchange 

believes that its provision of the access 

services associated with the Proposed 

Access Fees will not result in excessive 

pricing or supra-competitive profit. To 

illustrate, on a going-forward, fullyannualized basis, the Exchange projects 

that its annualized revenue for 

providing the access services associated 

with the Proposed Access Fees would 

be approximately $1,476,000 per 

annum, based on a recent billing cycle. 

The Exchange projects that its 

annualized expense for providing the 

access services associated with the 

Proposed Access Fees would be 

approximately $897,084 per annum. 

Accordingly, on a fully-annualized 

basis, the Exchange believes its total 

projected revenue for the providing the 

access services associated with the 

Proposed Access Fees will not result in 

excessive pricing or supra-competitive 

profit, as the Exchange will make only 

a 39% profit margin on the Proposed 

Access Fees ($1,476,000 in revenue 

minus $897,084 in expense = $578,916 

profit per annum). The Exchange notes 

that the fees charged to each Member for 


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31See supra note 23. 

32See id. 

33See supra note 9. 

34See supra note 10. 

35See Exchange Rule 210. The Sponsored User is 

subject to the fees, if any, of the Sponsoring 

Member. The Exchange notes that the Sponsoring 

Full Service MEO Ports can vary from 

month to month depending on the type 

used and the Non-Transaction Fees 

Volume-Based Tier that the Member 

achieves for that month. As such, the 

revenue projection is not a static 

number, with monthly Full Service 

MEO Port fees likely to fluctuate month 

to month. 

For the avoidance of doubt, none of 

the expenses included herein relating to 

the access services associated with the 

Proposed Access Fees relate to the 

provision of any other services offered 

by the Exchange. Stated differently, no 

expense amount of the Exchange is 

allocated twice. The Exchange notes 

that, with respect to the MIAX Pearl 

expenses included herein, those 

expenses only cover the MIAX Pearl 

options market; expenses associated 

with the MIAX Pearl equities market 

and the Exchange’s affiliate exchanges, 

MIAX and MIAX Emerald, are 

accounted for separately and are not 

included within the scope of this filing. 

Stated differently, no expense amount of 

the Exchange is also allocated to MIAX 

Pearl Equites, MIAX or MIAX Emerald. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to allocate the respective 

percentages of each expense category 

described above towards the total cost to 

the Exchange of operating and 

supporting the network, including 

providing the access services associated 

with the Proposed Access Fees because 

the Exchange performed a line-by-line 

item analysis of all the expenses of the 

Exchange, and has determined the 

expenses that directly relate to 

providing access to the Exchange. 

Further, the Exchange notes that, 

without the specific third-party and 

internal items listed above, the 

Exchange would not be able to provide 

the access services associated with the 

Proposed Access Fees to its Members 

and their customers. Each of these 

expense items, including physical 

hardware, software, employee 

compensation and benefits, occupancy 

costs, and the depreciation and 

amortization of equipment, have been 

identified through a line-by-line item 

analysis to be integral to providing 

access services. The Proposed Access 

Fees are intended to recover the 

Exchange’s costs of providing access to 

Exchange Systems. Accordingly, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they do not result in excessive 

pricing or supra-competitive profit, 

when comparing the actual costs to the 

Exchange versus the projected annual 

revenue from the Proposed Access Fees. 

The Exchange believes the proposed 

changes are reasonable, equitably 

allocated and not unfairly 

discriminatory, and do not result in a 

‘‘supra-competitive’’ 31 profit. Of note, 

the Guidance defines ‘‘supracompetitive profit’’ as profits that 

exceed the profits that can be obtained 

in a competitive market.32 With the 

proposed changes, the Exchange 

anticipates it will have a profit margin 

of 39% for its Full Service MEO Ports. 

Based on the 2019 Audited Financial 

Statements of the competing options 

exchanges (since the 2020 Audited 

Financial Statements will likely not 

become publicly available until early 

July 2021, after the Exchange has 

submitted this filing), the Exchange’s 

profit margin is well below the 

operating profit margins of other 

competing exchanges. For example, 

Nasdaq ISE, LLC’s (‘‘ISE’’) operating 

profit margin, for all of 2019, was 83%. 

Nasdaq PHLX LLC’s (‘‘PHLX’’) operating 

profit margin, for all of 2019, was 67%. 

The Exchange further believes its 

proposed fees are reasonable, equitably 

allocated and not unfairly 

discriminatory because the Exchange, 

and its affiliates, are still recouping the 

initial expenditures from building out 

their systems while the legacy 

exchanges have already paid for and 

built their systems. 

The Exchange believes that the 

proposed fees are reasonable, equitably 

allocated and not unfairly 

discriminatory because, for the flat fee, 

the Exchange provides each Member 

two (2) Full Service MEO Ports for each 

matching engine to which that Member 

is connected. Unlike other options 

exchanges that provide similar port 

functionality and charge fees on a per 

port basis,33 the Exchange offers Full 

Service MEO Ports as a package and 

provides Members with the option to 

receive up to two Full Service MEO 

Ports per matching engine to which it 

connects. The Exchange currently has 

twelve (12) matching engines, which 

means Members may receive up to 

twenty-four (24) Full Service MEO Ports 

for a single monthly fee, that can vary 

based on certain volume percentages. 

The Exchange currently assesses 

Members a fee of $5,000 per month in 

the highest Full Service MEO Port— 

Bulk Tier, regardless of the number of 

Full Service MEO Ports allocated to the 

Member. Assuming a Member connects 

to all twelve (12) matching engines 

during a month, with two Full Service 

MEO Ports per matching engine, this 

results in a cost of $208.33 per Full 

Service MEO Port—Bulk ($5,000 

divided by 24) for the month. This fee 

has been unchanged since the Exchange 

adopted Purge Port fees in 2018.34 The 

Exchange now proposes to increase the 

Full Service MEO Port fees, with the 

highest Tier fee for a Full Service MEO 

Port—Bulk of $10,000 per month. 

Members will continue to receive two 

(2) Full Service MEO Ports to each 

matching engine to which they are 

connected for the single flat monthly 

fee. Assuming a Member connects to all 

twelve (12) matching engines during the 

month, and achieves the highest Tier for 

that month, with two Full Service MEO 

Ports—Bulk per matching engine, this 

would result in a cost of $416.67 per 

Full Service MEO Port ($10,000 divided 

by 24). 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues if they 

deem fee levels at a particular venue to 

be excessive. In such an environment, 

the Exchange must continually adjust its 

fees for services and products, in 

addition to order flow, to remain 

competitive with other exchanges. The 

Exchange believes that the proposed 

changes reflect this competitive 

environment. 

The Guidance provides that in 

determining whether a proposed fee is 

constrained by significant competitive 

forces, the Commission will consider 

whether there are reasonable substitutes 

for the product or service that is the 

subject of a proposed fee. As described 

below, the Exchange believes substitute 

products and services are available to 

market participants, including, among 

other things, other options exchanges 

that market participants may connect to 

in lieu of the Exchange, indirect 

connectivity to the Exchange via a thirdparty reseller and/or trading of any 

options products, including proprietary 

products, in the Over-the-Counter 

(‘‘OTC’’) markets. 

There is also no regulatory 

requirement that any market participant 

connect to any one options exchange, 

that any market participant connect at a 

particular connection speed or act in a 

particular capacity on the Exchange, or 

trade any particular product offered on 

an exchange. Moreover, membership is 

not a requirement to participate on the 

Exchange. A market participant may 

submit orders to the Exchange via a 

Sponsored User.35 Indeed, the Exchange 


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Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 37355 

Member is not required to publicize, let alone 

justify or file with the Commission its fees, and as 

such could charge the Sponsored User any fees it 

deems appropriate, even if such fees would 

otherwise be considered supra-competitive, or 

otherwise potentially unreasonable or 

uncompetitive. 

36See Securities Exchange Act Release No. 90333 

(November 4, 2020), 85 FR 71666 (November 10, 

2020) (SR–CBOE–2020–105) (the ‘‘Cboe Fee 

Filing’’). The Cboe Fee Filing cited to the October 

2020 Active Broker Dealer Report, provided by the 

Commission’s Office of Managing Executive, on 

October 8, 2020. 

37 Id. 

38See ‘‘The market at a glance’’, available at 

www.miaxoptions.com (last visited June 30, 2021). 

39 15 U.S.C. 78s(b)(3)(A)(ii). 

40 17 CFR 240.19b–4(f)(2). 

is unaware of any one options exchange 

whose membership includes every 

registered broker-dealer. Based on a 

recent analysis conducted by the Cboe 

Exchange, Inc. (‘‘Cboe’’), as of October 

21, 2020, only three (3) of the brokerdealers, out of approximately 250 

broker-dealers, were members of at least 

one exchange that lists options for 

trading and were members of all 16 

options exchanges.36 Additionally, the 

Cboe Fee Filing found that several 

broker-dealers were members of only a 

single exchange that lists options for 

trading and that the number of members 

at each exchange that trades options 

varies greatly.37

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would place 

certain market participants at the 

Exchange at a relative disadvantage 

compared to other market participants 

or affect the ability of such market 

participants to compete. 

Intra-Market Competition 

The Exchange believes that the 

Proposed Access Fees do not place 

certain market participants at a relative 

disadvantage to other market 

participants because the Proposed 

Access Fees do not favor certain 

categories of market participants in a 

manner that would impose a burden on 

competition; rather, the allocation of the 

Proposed Access Fees reflects the 

network resources consumed by the 

various size of market participants— 

lowest bandwidth consuming members 

pay the least, and highest bandwidth 

consuming members pays the most, 

particularly since higher bandwidth 

consumption translates to higher costs 

to the Exchange. 

Inter-Market Competition 

The Exchange believes the Proposed 

Access Fees do not place an undue 

burden on competition on other options 

exchanges that is not necessary or 

appropriate. In particular, options 

market participants are not forced to 

connect to (and purchase MEO Ports 

from) all options exchanges. The 

Exchange also notes that it has far less 

Members as compared to the much 

greater number of members at other 

options exchanges. Not only does MIAX 

Pearl have less than half the number of 

members as certain other options 

exchanges, but there are also a number 

of the Exchange’s Members that do not 

connect directly to MIAX Pearl. There 

are a number of large users of the MEO 

Interface and broker-dealers that are 

members of other options exchange but 

not Members of MIAX Pearl. The 

Exchange is also unaware of any 

assertion that its existing fee levels or 

the Proposed Access Fees would 

somehow unduly impair its competition 

with other options exchanges. To the 

contrary, if the fees charged are deemed 

too high by market participants, they 

can simply disconnect. 

The Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

15 competing options venues if they 

deem fee levels at a particular venue to 

be excessive. Based on publiclyavailable information, and excluding 

index-based options, no single exchange 

has more than 16% market share. 

Therefore, no exchange possesses 

significant pricing power in the 

execution of multiply-listed equity and 

ETF options order flow. As of June 30, 

2021, the Exchange had only a 5.31% 

market share of the U.S. equity options 

industry for the month of June 2021.38

The Exchange is not aware of any 

evidence that a market share of 

approximately 5–6% provides the 

Exchange with anti-competitive pricing 

power. If the Exchange were to attempt 

to establish unreasonable pricing, then 

no market participant would join or 

connect, and existing market 

participants would disconnect. The 

Exchange believes that the ever-shifting 

market share among exchanges from 

month to month demonstrates that 

market participants can discontinue or 

reduce use of certain categories of 

products, or shift order flow, in 

response to fee changes. In such an 

environment, the Exchange must 

continually adjust its fees and fee 

waivers to remain competitive with 

other exchanges and to attract order 

flow to the Exchange. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,39 and Rule 

19b–4(f)(2) 40 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2021–33 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2021–33. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 


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37356 Federal Register / Vol. 86, No. 133 / Thursday, July 15, 2021 / Notices 

41 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release Nos. 91598 

(April 16, 2021), 86 FR 21373 (April 22, 2021) (SR– 

NYSE–2021–25); 91599 (April 16, 2021), 86 FR 

21365 (April 22, 2021) (SR–NYSEAMER–2021–21); 

91600 (April 16, 2021), 86 FR 21384 (April 22, 

2021) (SR–NYSEArca–2021–24); 91601 (April 16, 

2021), 86 FR 21410 (April 22, 2021) (SR– 

NYSECHX–2021–07); and 91602 (April 16, 2021), 

86 FR 21393 (April 22, 2021) (SR–NYSENAT–2021– 

09) (collectively, the ‘‘Notices’’). For ease of 

reference, citations to the Notice(s) are to the Notice 

for SR–NYSE–2021–25. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 92089 

(June 2, 2021), 86 FR 30510 (June 8, 2021). The 

Commission designated July 21, 2021, as the date 

by which it should approve, disapprove, or institute 

proceedings to determine whether to disapprove the 

proposed rule changes. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Notice, supra note 3, at 21373. 

8See id. The Exchanges themselves are indirect 

subsidiaries of ICE. See id. at 21373 n.6. 

9See id. at 21373. 

10See id. The Exchanges recently filed proposed 

rule changes regarding the IDS circuits and certain 

other services offered to NCL Customers. See, e.g., 

Securities Exchange Act Release No. 91217 

(February 26, 2021), 86 FR 12715 (March 4, 2021) 

(SR–NYSE–2021–14). 

11See Notice, supra note 3, at 21373. 

12See id. 

13See id. Mahwah Customers may also use a third 

party wireless connection, including a proprietary 

wireless connection, to the Mahwah Data Center, in 

which case the portion of the connection closest to 

the Mahwah Data Center is wired. See id. at 21373 

n.8. Regarding services offered by Telecoms, the 

Exchanges state that Telecoms are licensed by the 

Federal Communications Commission and are not 

required to be, or be affiliated with, a member of 

the Exchanges. See id. at 21373 n.9. 

14See id. at 21373–74. The Exchanges state that 

a Telecom elects which MMR it will use, or if it 

will use both, and that neither IDS nor the 

Exchange knows the termination point of a 

Telecom’s circuit or the content of any data sent on 

a circuit. See id. at 21374 n.10. 

15See id. at 21374. 

16 In addition, the Exchanges state that a Telecom 

may sell access to its circuits to a second Telecom, 

which allows the second Telecom to use the first 

Telecom’s circuit to access the Mahwah Data 

Center. The second Telecom thereby gains access to 

the Mahwah Data Center, where it installs its 

equipment in an MMR, without incurring the cost 

of installing its own proprietary circuits to the 

Mahwah Data Center. According to the Exchanges, 

IDS does not consent to, and need not be informed 

of, a Telecom’s sale of a circuit to another Telecom. 

See id. at 21374. 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2021–33 and 

should be submitted on or before 

August 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15035 Filed 7–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92368; File Nos. SR–NYSE– 

2021–25, SR–NYSEAMER–2021–21, SR– 

NYSEArca–2021–24, SR–NYSECHX–2021– 

07, SR–NYSENAT–2021–09] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC, NYSE 

American LLC, NYSE Arca, Inc., NYSE 

Chicago, Inc., and NYSE National, Inc.; 

Order Instituting Proceedings To 

Determine Whether To Approve or 

Disapprove Proposed Rule Changes 

To Amend the Fee Schedule To Add 

Meet-Me-Room Connectivity Services 

Available at the Mahwah Data Center 

July 9, 2021. 

I. Introduction 

On April 9, 2021, New York Stock 

Exchange LLC (‘‘NYSE’’), NYSE 

American LLC (‘‘NYSE American’’), 

NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE 

Chicago, Inc. (‘‘NYSE Chicago’’), and 

NYSE National, Inc. (‘‘NYSE National’’) 

(collectively, the ‘‘Exchanges’’) each 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’ 

or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2

a proposed rule change to amend the 

schedule (‘‘Fee Schedule’’) to set forth 

several ‘‘Meet-Me-Room’’ connectivity 

services available at the data center in 

Mahwah, New Jersey (‘‘Mahwah Data 

Center’’) for associated fees, and 

establish procedures for the allocation 

of cabinets and power to such customers 

should availability become limited. The 

proposed rule changes were published 

for comment in the Federal Register on 

April 22, 2021.3 On June 2, 2021, 

pursuant to Section 19(b)(2) of the Act,4

the Commission designated a longer 

period within which to either approve 

the proposed rule changes, disapprove 

the proposed rule changes, or institute 

proceedings to determine whether to 

disapprove the proposed rule changes.5

The Commission has received no 

comment letters on the proposed rule 

changes. This order institutes 

proceedings under Section 19(b)(2)(B) of 

the Exchange Act 6 to determine 

whether to approve or disapprove the 

proposed rule changes. 

II. Description of the Proposed Rule 

Changes 

The Exchanges propose to amend the 

Fee Schedule to set forth several ‘‘MeetMe-Room’’ (or ‘‘MMR’’) connectivity 

services available at the data center in 

Mahwah, New Jersey (‘‘Mahwah Data 

Center’’), and associated fees, and 

establish procedures for the allocation 

of cabinets and power to MMR 

customers should availability become 

limited.7

The Exchanges state that 

Intercontinental Exchange, Inc. (‘‘ICE’’), 

through its ICE Data Services (‘‘IDS’’) 

business, operates the Mahwah Data 

Center.8 From the Mahwah Data Center, 

the Exchanges provide co-location 

services to any market participant that 

requests to receive co-location services 

directly from the Exchange (‘‘Users’’).9

Services are also available to customers 

that are not co-location Users (‘‘NCL 

Customers’’) 10 (Users and NCL 

Customers, together the ‘‘Mahwah 

Customers’’).11

The Exchanges state that Mahwah 

Customers require circuits connecting 

into and out of the Mahwah Data Center 

in order to connect their equipment 

outside of the Mahwah Data Center to 

their equipment or port within the 

Mahwah Data Center.12 They state that 

IDS and numerous third-party 

telecommunications service providers 

(‘‘Telecoms’’) provide these connections 

to Mahwah Customers in the form of 

wired circuits into and out of the 

Mahwah Data Center.13 The Exchanges 

explain that a Telecom completes a 

wired circuit by placing equipment in 

an MMR and installing carrier circuits 

between the Telecom’s MMR equipment 

and one or more points outside the 

Mahwah Data Center.14 Mahwah 

Customers that contract with a Telecom 

to use its circuit connection connect to 

the Telecom’s MMR equipment using a 

cross connect.15 Once connected to the 

Telecom’s equipment, the Mahwah 

Customers can then use the Telecom’s 

circuit to transport data into and out of 

the Mahwah Data Center.16

The Exchanges state that they make 

the current proposals solely as a result 

of their determination that the 

Commission’s interpretations of the 

Act’s definitions of the terms 


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